May 14, 2015

Summary of Consolidated Financial Results for the Year Ended March 31, 2015
Company name:

SRA Holdings, Inc.
(URL: http://www.sra-hd.co.jp/)
Tokyo Stock Exchange

Stock listing:Code number:President:
For inquiries, please contact:
Tel:

3817
Toru Kashima
Makoto Kitai, General Manager, Finance Department, Administrative Headquarters(03)-5979-2666
Date of ordinary general meeting of shareholders:June 26, 2015
Scheduled commencement of dividend payment:
June 12, 2015
Scheduled date of submission of financial reports:
June 26, 2015
Results Supplement Materials: Yes
Results Presentation Meeting : Yes (for institutional investors)

1. Consolidated Financial Results for Fiscal 2015(from April 1, 2014 to March 31, 2015)(1) Consolidated Operating Results(All amounts rounded down, % change YoY)Net Sales

Fiscal 2015
Fiscal 2014

Operating Income

Ordinary Profit

Net Income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

36,53535,146

4.0
9.3

3,047
2,807

8.5
15.2

3,813
3,324

14.7
15.3

1,638
2,134

(23.2)
27.0

Note：Comprehensive Income
Fiscal 2015: ¥ 2,373million (9.8％）
Fiscal 2014: ¥ 2,162million ((1.9)％）
Net Income
per Share

Yen

Ratio of Net Income
to Shareholders’Equity%－166.799.1
12.4

Net Income per Shareafter Dilution

Yen
Fiscal 2015
136.34
Fiscal 2014168.05
Reference: Gain (loss) on equity method investments:
Fiscal 2015: —Fiscal 2014: —Ratio of Ordinary
Profit to Total Assets

Ordinary Profit
Ratio

%

%

12.5
11.5

8.3
8.0

(2) Consolidated Financial Position
Millions of yen%

Shareholders’ Equity
per ShareYen

18,85917,083

59.4
57.7

1,565.05
1,427.78

Cash Flows fromOperating Activities

Cash Flows from
Investing Activities

Cash Flows from
Financing Activities

Cash and Cash Equivalents
at the End of Period

Millions of yen

Millions of yen

Millions of yen

Millions of yen

3,290
2,131

(1,626)192(932)(2,065)

8,792
7,909

Total Assets

Net Assets

Millions of yen
Fiscal 2015
31,714
Fiscal 2014
29,527
Reference: Shareholders’ equity
Fiscal 2015: ¥ 18,834 million
Fiscal 2014: ¥ 17,051 million

Shareholders’ Equity Ratio(3) Consolidated Cash Flows

Fiscal 2015
Fiscal 2014

2. Dividends
Dividend per Share
End ofFirst
Quarter
Fiscal 2014
Fiscal 2015
Fiscal 2016(forecast)End ofSecondQuarter

End ofThird
QuarterYear-end

For theyear

Total
Dividends(for the year)

Dividend
Propensity(consolidated)

Net Assets to
Dividend
Ratio(consolidated)

Yen

Yen

Yen

Yen

Yen

Millions of yen

%

%

－
－
－

0.00
17.00
25.00

－
－
－

40.00
38.00
40.00

40.00
55.00
65.00

477
661

23.8
40.3
34.6

2.9
3.7

1

3. Consolidated Earnings Forecast for Fiscal 2016 (from April 1, 2015 to March 31, 2016)

Net Sales（% change YoY is for the fiscal year or for interim period）
Profit attributable to owners Net Income
Ordinary Profit
per Shareof the parent

Operating Income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

Yen

16,86037,300

2.2
2.1

1,125
3,360

14.4
10.2

1,170
3,450

(8.1)
(9.5)

770
2,260

－
37.9

63.98
187.79Interim Period
Full Year

4. Others(1) Changes to significant subsidiaries during the current period :No

Note: Changes in specified subsidiaries during the current period that caused changes in the scope of consolidation(2) Changes in accounting principles, changes in accounting estimates, and restatements
1. Changes caused by revision of accounting standards, etc. :Yes
2. Changes other than 1. above:No
3. Changes in accounting estimates:
No
4. Restatements:
No(3) Number of outstanding shares (common shares)
1. Shares issued at the end of term (including own shares)
Fiscal 2015: 15,240,000 sharesFiscal 2014: 15,240,000 shares
2. Own shares at end of term
Fiscal 2015: 3,205,445 sharesFiscal 2014: 3,297,610 shares
3. Average number of shares over period
Fiscal 2015: 12,016,780 sharesFiscal 2014: 12,699,866 shares（Reference）Non-Consolidated Financial Results for Fiscal 2015 (from April 1, 2014 to March 31, 2015)(% change YoY)
(1) Non-Consolidated Operating Results
Net Sales

Fiscal 2015
Fiscal 2014

Operating Income

Net Income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen

%

756
2,541

(70.2)
113.2
113 2

519
2,224

(76.7)
159.7

498
2,210

(77.5)
161.2

181
2,155

(91.6)
155.1

Net Income
per Share
Fiscal 2015
Fiscal 2014

Ordinary Profit

Net Income per Shareafter Dilution

Yen

Yen

13.75
155.19－154.13(2) Non-Consolidated Financial Position
Total Assets

Net Assets

Millions of yen

Millions of yen%

Shareholders’ Equity
per Share
Yen

99.4
99.1

691.08713.64

Shareholders’ Equity Ratio

9,190
9,164
9,452
9,404
Reference: Shareholders’ equity:
Fiscal 2015: ¥ 9,139 million
Fiscal 2014: ¥ 9,371 million
Fiscal 2015
Fiscal 2014

Note: Forecast performance is predicted by the Company based on information currently available at the time of theforecast. Actual financial results may differ due to a number of factors.

2

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2015

1. Analysis of Business Results and Financial Position(1) Analysis of Business Results(Business results for the fiscal year)
During the fiscal year (April 1, 2014 to March 31, 2015), the Japanese economy sustained a moderate recovery
thanks to a pickup in personal consumption, which had stagnated due to the impact of the consumption tax increase,
as well as to an improvement in corporate earnings.
In the information services industry, despite a modest increase in IT investments, mainly in the banking andsecurities industries and manufacturing industries, the environment for securing orders remained severe due tointensifying competition.
Amid this business environment, the SRA Holdings Group addressed the following issues during the final yearof its Medium-Term Management Plan.
■Undertake structural reforms in existing businesses
We implemented the following measures to promote structural reforms in existing businesses.
1) Expand orders and sales by strengthening business capabilities
We focused on activities for securing orders in our fields of expertise (financial, manufacturing embedded systems,
education), created new projects through proposal-based sales that leverage our “strengths,” and fortified our projectand order management structure. As a result of these efforts, nine of 11 consolidated subsidiaries, beginning with corecompanies Software Research Associates, Inc. (SRA) and Advanced Integration Technology, Inc. (AIT), recorded
increases in sales over the previous fiscal year.
2) Build a high-profit production structure
We also worked to raise the profitability of projects and strengthen the management of staff allocation to realize an
appropriate level of production overhead costs. As a result, the Systems Development and System Operations andInfrastructure Development business both achieved a gross profit margin exceeding 20%.
3) Transform to a cost structure appropriate for our business scale
We commenced a shared service within the Group and worked to enhance the operational cost efficiency of SRA
Professional Service, Co., Ltd., which handles this service. As a result, we achieved an improvement in the selling,
general and administrative (SG&A)-to-sales ratio at SRA.
■“Own IP products business” x “overseas business”
We adopted the following measures to implement our “own IP products business” x “overseas business” (mediumand long-term growth strategy), which involves discovering cutting-edge and promising own IP products in the
United States and promoting these in China, India, ASEAN and other growth markets.
1) We made additional business investments in Cavirin Systems, Inc. and Proxim Wireless Corporation with the aimof further implementing our medium- and long-term growth strategy.
2) Proxim Wireless fully commenced the licensing business for its leading-edge wireless products in the BRICs.

3

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2015

3) Cavirin Systems commenced U.S. sales of cavirin, an advanced solution for responding to data centers and cloudcomputing. A number of well-known major companies, beginning with SugarCRM, Inc., have introduced thissolution and business inquiries are increasing. Backed by this track record, we also began sales in Japan, where cloudcomputing is rapidly advancing.
■Realize even higher added value in existing businesses

In line with “realize even higher added value in existing businesses,” an initiative that began on a full-scale basis in
the fiscal year ending March 2016, we are collaborating with Red Hat, Inc. (announcement made in April 2015, with
SRA becoming the first Embedded Distributor Partner in Japan) and leveraging our technological capabilities andsolid track record in open source and embedded fields as we aim to develop our business in the Internet of Things(IoT) field*.
*Internet of Things (IoT) field
Traditionally, only IT devices were connected with the Internet. However, the Internet of Things (IoT) is a structure that realizes newservices by connecting a variety of “things,” beginning with home appliances, to the Internet. This market is expected to expand globallyin the future.

Due to the above initiatives, our consolidated business results for the fiscal year were as follows.
In terms of net sales, the Product Sales business recorded only a slight increase in net sales, but the Systems
Development business and the System Operations and Infrastructure Development business posted steady increases
in net sales. As a result, consolidated net sales amounted to ¥36,535 million, a 4.0% increase from the previous fiscal
year.
At the profit level, operating income rose 8.5% from the previous fiscal year to ¥3,047 million due to an increasein gross profit accompanying growth in sales and a streamlining of SG&A expenses. Ordinary profit rose 14.7% fromthe previous fiscal year to ¥3,813 million due to an increase in non-operating income concerning business
investments (foreign exchange gains and other).
A loss on valuation of investment securities for shares in SJI Inc. held by the SRA Group was posted as an
extraordinary loss. As a result, net income amounted to ¥1,638 million, a 23.2% decline from the previous fiscal year.
As detailed above regarding consolidated results for the fiscal year, net sales increased from the previous fiscal
year, while operating income and ordinary profit also rose. However, net income declined due to the recording of an
extraordinary loss.
Consolidated Business Results(Millions of Yen)FY2011FY2012FY2013

FY2014

Net sales

33,16433,41632,16835,146FY2015
Most recent forecast
figures(announced
May 7, 2015)
36,535

Operating income

2,238

2,490

2,436

2,807

3,047

3,047

Ordinary profit

2,374

2,656

2,883

3,324

3,813

3,813

Net income

1,313

1,233

1,681

2,134

1,638

1,638

4

Actual
36,535SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2015

A summary of consolidated business results for the fiscal year by business segment is shown below.
1) Systems Development
The Systems Development business recorded increases in sales to banks and securities companies as well as tomanufacturing industries and universities. As a result, net sales increased 5.0% from the previous fiscal year to¥19,288 million.
2) System Operations and Infrastructure Development
Although university-related orders rose only slightly, orders from companies increased sharply. As a result, net salesof the System Operations and Infrastructure Development business increased 8.9% from the previous fiscal year to¥3,894 million.
3) Product Sales
Sales by AIT were flat, but SRA posted a slight increase in sales. As a result, sales of the Product Sales business rose
1.1% from the previous fiscal year to ¥13,353 million.
(Outlook for the Next Fiscal Year)In the next fiscal year, the Japanese economy is expected to recover moderately due in part to the effects of declining
crude oil prices as well as the impact of various policies amid the trend toward ongoing improvements in theemployment and income environments.
Under these conditions, the Group will aim to reform its earnings structure (establish a high-earnings model) andwill work to “raise profitability of existing businesses (raise the gross profit margin and improve the SG&A-to-sales
ratio),” “reform its business model,” and strengthen its “own IP products business” x “overseas business.”
Regarding the outlook for consolidated results for the fiscal year ending March 2016, while implementing theabove measures, we forecast net sales of ¥37,300 million, operating income of ¥3,360 million, ordinary profit of¥3,450 million and profit attributable to owners of the parent of ¥2,260 million.
(2) Analysis of Financial Position
Total assets at the end of the fiscal year amounted to ¥31,714 million, an increase of 7.4% from the end of theprevious fiscal year. Total liabilities increased 3.3% from the end of the previous fiscal year to ¥12,855 million andnet assets increased 10.4% to ¥18,859 million from the end of the previous fiscal year. Details of the principal
increases and decreases from the end of the previous fiscal year are as follows.
(Total Assets)
Cash and deposits increased ¥983 million to ¥8,672 million due to such factors as the collection of trade receivables.
Short-term loans receivable increased ¥708 million to ¥1,767 million. Investment securities increased ¥559 million to¥4,177 million due to the acquisition of stock. On the other hand, notes and accounts receivable—trade decreased¥631 million to ¥6,223 million due to the collection of trade receivables.
(Total Liabilities)

5

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2015

Accrued consumption taxes increased ¥366 million to ¥621 million. Accounts payable—trade increased ¥253 million
to ¥3,465 million due to an increase in trade payables. On the other hand, short-term loans payable decreased ¥330
million to ¥1,179 million due to repayment to financial institutions.
(Total Net Assets)
Retained earnings increased ¥956 million to ¥15,288 million. Valuation difference on available-for-sale securities
increased ¥356 million to ¥594 million due to fluctuations in the market value of short-term investment securities andinvestment securities. Foreign currency translation adjustments when converting the impact of exchange rates onoverseas subsidiaries increased ¥355 million to ¥585 million.
Cash and cash equivalents on a consolidated basis at the end of the fiscal year increased ¥883 million comparedwith at the previous fiscal year-end to ¥8,792 million.
The status of cash flows and factors underlying changes in cash flows for the fiscal year are shown below.
Cash Flows from Operating Activities
Net cash provided by operating activities amounted to ¥3,290 million compared with ¥2,131 million in the previous
fiscal year. This consisted mainly of such cash inflows as income before income taxes and minority interests of¥2,981 million, loss on valuation of investment securities of ¥825 million and a decrease in notes and accounts
receivable—trade of ¥715 million, while cash outflows were primarily income taxes paid of ¥1,125 million and anincrease in inventories of ¥729 million.
Cash Flows from Investing Activities
Net cash used in investing activities amounted ¥1,626 million compared with net cash provided by investing activitiesof ¥192 million in the previous fiscal year. This consisted mainly of such inflows as ¥443 million from the collectionof loans receivable and ¥255 million in proceeds from sales of investment securities, while outflows included ¥940
million for purchases of investment securities and ¥898 million for payments of loans receivable.
Cash Flows from Financing Activities
Net cash used in financing activities amounted to ¥932 million compared with ¥2,065 million in the previous fiscal
year. This was due mainly to such cash inflows as ¥80 million in proceeds from exercise of stock option and suchcash outflows as ¥682 million in cash dividends paid and ¥300 million for the repayments of long-term loans payable.
Cash Flow Indicators
FY2013

FY2014FY2015

Shareholders’ equity ratio (%)
Shareholders’ equity ratio at market value (%)

61.6

57.7

59.4

49.2

56.0

62.8

Debt redemption years to cash flow (years)

0.9

0.7

0.4

Interest coverage ratio (times)

56.5

83.9

131.6

Notes:
Shareholders’ equity ratio: Shareholders’ equity/total assets
Shareholders’ equity ratio at market value: Market capitalization/total assets
Debt redemption years to cash flow: Interest-bearing debt/operating cash flow
Interest coverage ratio: Operating cash flow/interest expenses
6

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2015

1. All indicators were calculated using consolidated financial figures.
2. Market capitalization is calculated using the total number of shares outstanding at the end of the fiscal period
excluding treasury stock.
3. Cash flows from operating activities is used for cash flow.
4. Interest-bearing debt includes all debt that pays interest as listed on the Consolidated Balance Sheets.
(3) Basic Policy on Profit Allocation and Dividends for the Fiscal Year under Review and the Next Fiscal Year
The Company’s basic policy with respect to dividends is to actively make business investments for securing earnings
power and growth potential with the aim of increasing the corporate value of the SRA Group. At the same time, theCompany aims to allocate profits with a consolidated dividend payout ratio of 20% to enhance the redistribution of
profits to shareholders.
Accordingly, one of the Company’s management targets is to “achieve and maintain double-digit consolidated
ROE” and we aim to carry out management that emphasizes the efficient use of shareholders’ equity.
Regarding dividends for the fiscal year ended March 31, 2015, to further enhance the redistribution of profits toshareholders on the basis of trends in business results, upon taking into consideration the payout ratio and dividend
yield, the Company will increase ordinary dividends per share by ¥15.00 and pay cash dividends per share of ¥55.00(consisting of a ¥17.00 interim dividend and a ¥38.00 year-end dividend).
Regarding dividends for the fiscal year ending March 31, 2016, we plan to increase ordinary dividends per shareby ¥10.00 and pay cash dividends per share of ¥65.00 (consisting of a ¥25.00 interim dividend and a ¥40.00 year-end
dividend). In the event that these dividends are paid, the consolidated payout ratio is expected to be 34.6%.
In our new Medium-Term Management Plan (fiscal 2016 – fiscal 2018) that is currently being formulated, we areconsidering re-evaluating our target consolidated payout ratio to further enhance the redistribution of profits toshareholders.
We also regard the acquisition of treasury shares as an effective means of redistributing profits to shareholders.
Accordingly, we make such acquisitions appropriately while considering such factors as our stock price trends andfinancial condition.
(4) Business and Other Risks
The following principal risks could have an impact on the business results and financial condition of the Company as
the Group’s controlling company.
“Forward-looking” statements contained in this report represent judgments by the Group based on information
currently available to management as of the end of the fiscal period.
[1] Risk of fluctuations in business results of Group companies
An abrupt fluctuation in business results of Group companies due to various factors could have an adverse impact on
the Company’s business results.
[2] Maintaining confidentiality of customer information
In addition to being aware that it is an information processing company with numerous opportunities for handlingpersonal information, the SRA Holdings Group also sufficiently recognizes the critical nature of protecting personal
information, and thus, has established an internal monitoring structure. Concurrently, the SRA Holdings Group
provides education for its Group employees and business partners and makes efforts to protect personal information.
7

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2015

However, in the event of the unexpected leakage of information, besides losing the trust of business partners, the SRA
Holdings Group could become liable for payment of compensatory damages, which could have an effect on theGroup’s business results.
[3] Overseas Business Investments
As part of its business strategy, the SRA Group implements a policy of utilizing its “global reach,” which is a strength,
and actively makes business investments that include forming business and capital alliances with local companies andcarrying out M&A with the aim of cultivating overseas growth markets.
When making business investments, besides implementing preliminary surveys, the Company sufficiently
exchanges opinions with the management teams of the companies in which we invest. Following the investment as
well, we regularly manage the state of progress of businesses.
Nevertheless, the Company’s overseas businesses could inevitably be exposed to country risk due to factors suchas unforeseen rapid public unrest, market deterioration and exchange rate volatility or differences in politics, cultures,
systems, laws and business practices. Additionally, there is a possibility of changes of the management team, capital
structure and business strategies of investee companies. Such factors could prevent the Company from realizing
expected profits and lead to losses that could have an impact on the Company’s business results.
In addition to the above, the Company comprehensively incurs business and other risks of the SRA HoldingsGroup, which consists of SRA, a main subsidiary, and its subsidiaries.
The following principal risks could have an impact on the business results and financial condition of the SRA
Holdings Group.
[1] Responses of business partners when production volume fluctuates
In the Systems Development and the System Operations and Infrastructure Development businesses, besides its own
in-house engineers, the SRA Holdings Group utilizes business partners for the planned augmentation of its staff ofin-house engineers and expansion of business, as well as to augment those areas where it does not possess
technologies and to respond flexibly to changes in production volumes during peak production.
The SRA Holdings Group also utilizes business partners as one means of reducing production costs.
Nonetheless, in the event of a sudden unforeseen fluctuation in production volume, the inability to secure enoughbusiness partners possessing requisite skills or to arrange for business partners to take timely action could have an
impact on the Group’s business results.
[2] Project profitability in Systems Development
In the core Systems Development business, the SRA Holdings Group concludes bulk subcontracting contracts,
whereby it handles the entire system development and is responsible to its customers for completion. Therefore, evenfor projects for which a certain amount of income is expected at the time the order is received, there are instances
when profitability worsens because of such factors as customer requests for specification changes after commencing
development activities or a work process that exceeds the initial estimate. Moreover, incurring additional expenses
such as those related to defect guarantees after the confirmation of sales could result in lower profitability.
To prevent the occurrence of these projects, the Group reviews risk factors at the time an order is received andworks to improve the precision of its estimates while strengthening its project management structure in an organizedmanner. Nevertheless, any project incurring a large loss could have an effect on the Group’s business results.

8

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2015[3] Maintaining confidentiality of customer information
Along with being aware that it is an information processing company with numerous opportunities for handlingpersonal information, the Group also sufficiently recognizes the critical nature of personal information, and thus, hasestablished an internal monitoring structure. Concurrently, as a company that has acquired Privacy Mark certification,
the SRA Holdings Group provides education for its Group employees and outsourced staff and makes efforts toprotect personal information. However, in the event of the unexpected leakage of information, besides losing the trustof business partners, the SRA Holdings Group could become liable for payment of compensatory damages, which
could have an effect on the Group’s business results.

2. Management Policy(1) The Company’s Basic Management Policy
The SRA Holdings Group adheres to a basic management policy of maximizing user satisfaction through IT based on
its management principle of “contributing to the future of humanity through professional practice that fosters progressin the fields of computer science,” which has been our guiding principle since the founding of SRA. In accordancewith this basic management policy, amid a rapidly changing business environment, we will strive to meet the
expectations of the information services industry while raising profits for shareholders and increasing corporate value
by pursuing profitability and growth.
Regarding the management of the SRA Holdings Group, under our management vision of “creating new value
together with people through a global perspective and technologies,” we will raise the overall capabilities of theGroup with the aim of enhancing corporate value.
(2) Management Indicator Targets
The SRA Holdings Group has adopted “operating income margin” as a representative indicator of the Company’s
overall earnings power and has set the medium- and long-term numerical target of quickly attaining and maintaining
an operating income margin of 10% or higher.”Also, the SRA Holdings Group continues to use return on equity (ROE) as an indicator of efficient deploymentof shareholders’ equity. The Group has established the numerical target of “attaining and maintaining double-digit
consolidated ROE.”
The Group’s consolidated operating income margin and ROE are as shown below.
Consolidated operating income margin

Consolidated ROE

FY2011 (actual)

6.8%

8.6%

FY2012 (actual)

7.5%

7.9%

FY2013 (actual)

7.6%

10.2%

FY2014 (actual)

8.0%

12.4%

FY2015 (actual)

8.3%

9.1%

FY2016 (target)

9.0% (plan)

11.5% (plan)(3) Medium- and Long-term Management Strategy
The SRA Holdings Group is currently formulating a new Medium-Term Management Plan covering the three-year
period from fiscal 2016 (year ending March 2016) through fiscal 2018 (year ending March 2018). The orientation ofthis plan is as follows.

9

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2015

1. We will reform our earnings structure to raise corporate value and shareholder value, or more specifically, aim forthe establishment of a high-earnings model that secures the industry’s top level of profitability (operating profit ratio).
Our management tasks for attaining this target are as follows.
1) Raise the profitability of existing businesses•Further raise the gross profit margin and improve the SG&A-to-sales ratio2) Reform our business model•Promote our own IP products business + realize even higher added value in existing businesses•Build new business models
3) Strengthen “our own IP products business” x “overseas business”
2. Enhance the redistribution of profits to shareholders
1) Re-evaluate the consolidated payout ratio and shareholder dividends•Gradually raise the consolidated payout ratio2) Continuously raise ROE•Stably and continuously secure ROE of 10% or higher(4) Issues to Be Addressed by the Company
The SRA Holdings Group will undertake the following specific tasks to reform its earnings structure (establish ahigh-earnings model that secures the industry’s top level of profitability) toward raising corporate value andshareholder value.
1. Raise the profitability of existing businesses
1) Further raise gross profit margins•Eliminate large-scale unprofitable projects, expand offshore order placements, raise precision of project management,
continuously reduce production overhead costs and ensure the appropriate number of production personnel
2) Improve SG&A expenses-to-sales ratio•Raise operating efficiency by introducing the account manager system•Reduce operational costs at SRA Professional Service, which handles Head Office staff and shared services3) Expand orders and sales•Increase customer share of wallet by deeply cultivating existing customers
2. Reform our business model
1) Promote our own IP products business + realize even higher added value in existing businesses
10SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 20152) Build new business models (own IP products, new services) in such growth fields as the IoT, mobile, security,
cloud computing, Big Data/analytics and social technologies markets
3. Strengthen our “own IP products business” x “overseas business”•Incorporate the results of business investments into the Group’s earnings(5) Other Important Management Matters
None

3. Basic Thinking Concerning Adoption of Accounting Standard
In preparation for the future adoption of International Financial Reporting Standards (IFRS), discussion isprogressing regarding the establishment of in-house manuals and guidelines and the timing of adoption.

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SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2015

4. Consolidated Financial Statements(1) Consolidated Balance Sheets(Millions of Yen)FY2014(as of March 31, 2014)

FY2015(as of March 31, 2015)

ASSETS
Current assets:
Cash and deposits

7,689

8,672

Notes and accounts receivable—trade

6,855

6,223

Short-term investment securities

3,112

3,392

Merchandise and finished goods

300

784

Work in process

1,430

1,677

Short-term loans receivable

1,058

1,767

546

658

Other

1,150

977

Allowance for doubtful accounts

(27)

(27)

22,117

24,126

Buildings

346

317

Accumulated depreciation

(249)

(231)

Buildings, net

9785

Machinery, equipment and vehicles

575

566

Accumulated depreciation

(517)

(510)

Machinery, equipment and vehicles, net

58

55

Other

114

113

Accumulated depreciation

(75)

(78)

Other, net

39

35

Total property, plant and equipment

195

175

Other

672

520

Total intangible assets

672

520

3,618

4,177

948

1,060

Deferred tax assets

1,421

1,243

Guarantee deposits

370

324

Net defined benefit asset

42

44

Other

258

171

Allowance for doubtful accounts

(13)

(12)

Allowance for investment loss

(104)

(118)

Total investments and other assets

6,542

6,891

7,410

7,588

29,52731,714

Deferred tax assets

Total current assets
Noncurrent assets:
Property, plant and equipment

Intangible assets

Investments and other assets
Investment securities
Long-term loans receivable

Total noncurrent assets
Total assets
12

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2015

(Millions of Yen)FY2014(as of March 31, 2014)

FY2015(as of March 31, 2015)

LIABILITIESCurrent liabilities:
Accounts payable—trade

3,211

3,465

Short-term loans payable

1,509

1,179

Accrued expenses

583

593

Income taxes payable

882

880

Accrued consumption taxes

255

621

Provision for bonuses

550

568

Provision for directors’ bonuses

50

53

Provision for loss on construction contracts

416

662

Asset retirement obligations

18

–

Other

851

714

8,329

8,739

9

2

3,926

3,957

Provision for directors’ retirement benefits

161

140

Other

17

15

4,114

4,116

12,443

12,855

Capital stock

1,000

1,000

Capital surplus

4,475

4,468

Retained earnings

14,332

15,288Treasury stock(2,826)(2,727)

Total shareholders’ equity

16,982

18,030

Valuation difference on available-for-sale securities

238

594

Foreign currency translation adjustments

229

585

Remeasurements of defined benefit plans

(399)

(375)

68

804

32

25

Total net assets

17,08318,859Total liabilities and net assets

29,52731,714

Total current liabilities
Noncurrent liabilities:
Deferred tax liabilities

Net defined benefit liability

Total noncurrent liabilities
Total liabilities
NET ASSETS
Shareholders’ equity

Accumulated other comprehensive income

Total accumulated other comprehensive income
Subscription rights to shares

13

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2015

(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income(Consolidated Statements of Income)(Millions of Yen)FY2014(April 1, 2013March 31, 2014)35,146FY2015(April 1, 2014March 31, 2015)
36,535

Cost of sales

28,65929,850Gross profit

6,487

6,685

Selling, general and administrative expenses

3,679

3,637

Operating income

2,807

3,047

Interest received

193

202

Dividends received

49

31

Foreign exchange gains

133

357

Guarantee commission received

89

119

Other

101

100

Total non-operating income

568

812

Interest expenses

25

25

Stock transfer agency service fee

24

21

Other

1

0

Total non-operating expenses

51

46

3,324

3,813

Gain on sales of investment securities

5

19

Gain on reversal of subscription rights to shares

–

21

297

–

9

2

312

43

Loss on retirement of noncurrent assets

3

14

Loss on valuation of investment securities

–

825

Other

9

34

Total extraordinary loss

13

874

Income before income taxes and minority interests

3,623

2,981

Income taxes-current

1,461

1,475

Income taxes-deferred

27

(132)

Total income taxes

1,488

1,343

Income before minority interests

2,134

1,638

Net income

2,134

1,638

Net sales

Non-operating income

Non-operating expenses

Ordinary profit
Extraordinary income

Gain on revision of retirement benefit plans
Other
Total extraordinary income
Extraordinary loss

14

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2015

(Consolidated Statements of Comprehensive Income)(Millions of Yen)FY2014(April 1, 2013March 31, 2014)
2,134

FY2015(April 1, 2014March 31, 2015)
1,638

(349)

356

377

355

Remeasurements of defined benefit plans, net of tax–

23

Total other comprehensive income

27

735

Comprehensive income

2,162

2,373

(breakdown)Comprehensive income attributable to parent
company shareholders
Comprehensive income attributable to minority
shareholders

2,162

2,373

－

－

Income before minority interests
Other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustments

15

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2015

(3) Consolidated Statements of Changes in Net Assets
FY2014 (April 1, 2013-March 31, 2014)(Millions of Yen)
Shareholders’ equity
Total

CapitalCapitalRetained

Treasurystock

surplusearnings

stock

shareholders’equityBalance at beginning of period

1,000

4,483

12,789(1,393)

16,879Changes of items during the period
Dividends from surplus

(591)

(591)

Net income

2,134

2,134

Purchase of treasury stock
Disposal of treasury stock(1,544)(1,544)

111

104

(7)

Net change of items other thanshareholders’ equity
Total change during the period
Balance at the end of current period

－

(7)

1,543

(1,432)

102

1,000

4,475

14,332(2,826)

16,982

Accumulated other comprehensive income
Valuation

Balance at beginning of period

difference on

currency

available-for-translation

sale securities

adjustment

588

Remeasure-Totalments ofaccumu-definedlated otherbenefitcomprehen-plans

sive income

Subscription

Foreign

(148)

－

439

Total netrights toassetsshares39

17,359Changes of items during the period
Dividends from surplus(591)

Net income

2,134

Purchase of treasury stock(1,544)

Disposal of treasury stock104

Net change of items other thanshareholders’ equity

(349)

377

(399)

(371)

(6)

(377)

Total change during the period

(349)

377

(399)

(371)

(6)

(275)

Balance at the end of current period

238

229

(399)

68

32

17,08316

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2015

FY2015 (April 1, 2014-March 31, 2015)(Millions of Yen)
Shareholders’ equity
Total

CapitalCapitalRetained

Treasurystock

surplusearnings

stock

shareholders’equityBalance at beginning of period

1,000

4,475

14,332(2,826)

16,982

Changes of items during the period
Dividends from surplus

(682)

(682)

Net income

1,638

1,638

Purchase of treasury stock
Disposal of treasury stock

(7)

(0)

(0)

99

92

Net change of items other thanshareholders’ equity
Total change during the period
Balance at the end of current period

－

(7)

956

99

1,048

1,000

4,468

15,288(2,727)

18,030

Accumulated other comprehensive income
Valuation

Balance at beginning of period

difference on

currency

available-for-translation

sale securities

adjustment

238

Remeasure-Totalments ofaccumu-definedlated otherbenefitcomprehen-plans

sive income

Subscription

Foreign

229

(399)

68

Total netrights toassetsshares32

17,083

Changes of items during the period
Dividends from surplus(682)

Net income

1,638

Purchase of treasury stock(0)

Disposal of treasury stock92

Net change of items other thanshareholders’ equity

356

355

23

735

(7)

728

Total change during the period

356

355

23

735

(7)

1,776

Balance at the end of current period

594

585

(375)

804

25

18,85917

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2015

(4) Consolidated Statements of Cash Flows(Millions of Yen)FY2014(April 1, 2013March 31, 2014

FY2015(April 1, 2014March 31, 2015

Net cash provided by (used in) operating activities:
Income before income taxes and minority interests

3,623

2,981

416

389

Increase (decrease) in provision for retirement benefits(3,622)–

Increase (decrease) in net defined benefit liability

3,305

31

Increase (decrease) in provision for directors’ retirement benefits

(3)

(21)

Increase (decrease) in provision for bonuses

(44)

17

Increase (decrease) in provision for directors’ bonuses–

3

Increase (decrease) in allowance for doubtful accounts

(9)

(0)

Increase (decrease) in allowance for investment loss

(2)

(0)

(243)

(234)

Interest expenses

25

25

Loss (gain) on valuation of investment securities–

825

Loss (gain) on sales of investment securities

(5)

(19)

Loss on valuation of stocks of subsidiaries and affiliates

4–

Loss (gain) on sales of noncurrent assets(0)–Loss on retirement of noncurrent assets

3

14

Decrease (increase) in notes and accounts receivable—trade

(377)

715

Decrease (increase) in inventories

(468)

(729)

Increase (decrease) in notes and accounts payable—trade

721

204

Increase (decrease) in other liabilities

24

(175)

Increase (decrease) in accrued consumption taxes

13

365

Other, net

(242)

(113)

Subtotal

3,118

4,279

Interest and dividends income received

144

161

Interest expenses paid

(25)

(24)

Income taxes paid

(1,106)(1,125)

Net cash provided by operating activities

2,131

3,290

Purchase of short-term investment securities

–

(300)

Purchase of property, plant and equipment

(61)

(62)

0

0

Purchase of intangible assets

(122)

(141)

Purchase of investment securities

(67)

(940)

Proceeds from sales of investment securities

940

255

Proceeds from liquidation of subsidiaries and affiliates

82–

Payments of loans receivable

(769)

(898)

Collection of loans receivable

154

443

Payments into time deposits

(80)

(100)

Depreciation and amortization

Interest and dividend income

Net cash provided by (used in) investing activities:

Proceeds from sale of property, plant and equipment

18

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2015

Payments for guarantee deposits

(20)

(3)

Proceeds from collection of guarantee deposited

51

57

Other, net

8563

Net cash provided by (used in) investing activities

192(1,626)

(20)

(30)

–

(300)

(1,544)

(0)

(591)

(682)

Proceeds from exercise of stock option

91

80

Other

(0)

(0)

(2,065)(932)

Effect of exchange rate changes on cash and cash equivalents

153

151

Net increase (decrease) in cash and cash equivalents

411

883

Cash and cash equivalents at beginning of period

7,497

7,909

Cash and cash equivalents at the end of period

7,909

8,792

Net cash provided by (used in) financing activities:
Net increase (decrease) in short-term loans payable
Repayments of long-term loans payable
Purchase of treasury stock
Cash dividends paid

Net cash used in financing activities

19

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2015

(Change in Accounting Policies)(Adoption of accounting standard for retirement benefits)
Effective from the fiscal year ended March 31, 2015, the Company adopted the Accounting Standard for Retirement
Benefits (ASBJ Statement No. 26, May 17, 2012, hereafter, “Standard”) and Guidance on Accounting Standard for
Retirement Benefits (ASBJ Guidance No. 25, March 26, 2015, hereafter, “Guidance”), as set out in the main clause ofparagraph 35 of the Standard and the main clause of paragraph 67 of the Guidance. Accordingly, the methods forcalculating retirement benefit obligations and service costs have been revised. The method of attributing expected
benefit payments to periods has been changed from a point basis to the benefit formula basis and the method ofdetermining the discount rate has been changed from a discount rate based on the approximate number of years of theaverage remaining service period of employees for the bond period that serves as the basis for determining thediscount rate to a single weighted average discount rate reflecting the expected timing and amount of benefit payment
in each period.
The adoption of the Standard and the Guidance conforms to the transitional treatment stipulated by paragraph 37of the Standard.
The impact of this change on net defined benefit liability and retained earnings at the beginning of the fiscal year
as well as on operating income, ordinary profit and income before income taxes and minority interests in the fiscal
year was immaterial.

20

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2015

Segment Information and Others
Segment Information
1. Summary of Reporting Segments
The Group’s reporting segments are those for which financial information separate from that of other units comprising theGroup can be obtained. Periodic reviews are made of reporting segments by the Board of Directors for determining theallocation of management resources and assessment of business results.
The Company carries out overall management of subsidiaries engaged in the three businesses of “Systems
Development,” “System Operations and Infrastructure Development” and “Product Sales.” Therefore, the Group’s threereporting segments are “Systems Development,” “System Operations and Infrastructure Development” and “Product
Sales.”

Principal contents of business in each segment
Business segment

Content of businessIntegrated system development ranging from defining requirements todevelopment and maintenance of mainframe-based large systems



System integration covering system planning, development andintroduction of open systems

Systems Development



Solutions business offering business tools that utilize various products
and tools

Open source business that offers technical support for systems
through open source software

SystemOperations

andInfrastructure Development

Product SalesOperation management of computer systems and network systems

Overall operation that includes data management and facilities
management

Building of network systems



Outsourcing services

Sales of packaged software that includes licensingSales of system devices, centering on servers, in integration servicesConsulting services related to the introduction of IT

2. Accounting Treatment Method of Net Sales and Income or Losses, Assets, Liabilities and Others for Each
Reporting Segment
The accounting treatment method for the reporting business segments is the same as that described in Principal Items that
Serve as the Basis for Preparing the Consolidated Financial Statements.
Inventories are valued at an amount prior to the writing down of carrying value.
The figures for segment profits are on the basis of operating income.
Intersegment sales or transfers are based on current market prices.

21

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2015

3. Information Concerning Net Sales and Income or Losses, Assets, Liabilities and Others for Each Reporting
Segment
Fiscal 2014 (from April 1, 2013 to March 31, 2014)(Millions of Yen)
AmountSystemOperations

Systems
Development

andInfrastructurerecorded on
Product
Sales

theAdjustment

Total

*1

consolidated

amountstatements ofDevelopment

income *2

Sales(1) Sales to18,364

3,576

13,20635,146－35,146

41

288

499

830

(830)

－

Total sales

18,406

3,864

13,70535,977(830)

35,146

Operating income

2,265

814

929

4,010

(1,202)

2,807

Assets

8,983

1,282

6,361

16,627

12,90029,527

153

14

245

413

3

416

73

15

90

179

－

179

customers(2) Intersegment
sales ortransfers

OthersDepreciation
Increase of
tangible andintangible
assets
Notes:
1. The adjustment amounts are as follows:(1) The segment income adjustment of minus ¥1,202 million is a company-wide expense not apportioned to any reporting
segment. Company-wide expenses are general and administrative expenses and R&D expenses not attributed to any
reporting segment.
(2) Total Company assets amounted to ¥13,180 million for the fiscal year. These consisted mainly of the Group’s surplus
operating assets (cash, deposits and marketable securities), short-term loans receivable, long-term invested assets(investment securities and long-term loans receivable) and deferred tax assets.
(3) Depreciation expenses and increases of tangible and intangible assets included depreciation and additions to long-term
prepaid expenses, respectively.

2. Segment operating income is adjusted in operating income on the consolidated statements of income.

22

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2015

Fiscal 2015 (from April 1, 2014 to March 31, 2015)(Millions of Yen)
AmountSystemOperations

Systems
Development

andInfrastructurerecorded on
Product
Sales

theAdjustment

Total

*1

consolidated

amountstatements ofDevelopment

income *2

Sales(1) Sales to19,2883,894

13,35336,535－36,535

31

264

554

851

(851)

－

Total sales

19,3194,159

13,90837,386(851)

36,535

Operating income

2,306

925

1,066

4,298

(1,250)3,047

Assets

8,516

1,382

4,622

14,521

17,19331,714

121

12

251

385

3

389

69

15

126

212

2

214

customers(2) Intersegment
sales ortransfers

OthersDepreciation
Increase of
tangible andintangible
assets
Notes:
1. The adjustment amounts are as follows:(1) The segment income adjustment of minus ¥1,250 million is a company-wide expense not apportioned to any reporting
segment. Company-wide expenses are general and administrative expenses and R&D expenses not attributed to any
reporting segment.
(2) Total Company assets amounted to ¥17,523 million for the fiscal year. These consisted mainly of the Group’s surplus
operating assets (cash, deposits and marketable securities), short-term loans receivable, long-term invested assets(investment securities and long-term loans receivable) and deferred tax assets.
(3) Depreciation expenses and increases of tangible and intangible assets included depreciation and additions to long-term
prepaid expenses, respectively.

2. Segment operating income is adjusted in operating income on the consolidated statements of income.

23

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2015

(Significant Subsequent Events)
Subsidiary SRA accepted callable unsecured convertible bond-type corporate bonds with share acquisition rightsfrom SJI Inc., with which it has a business alliance and capital alliance. However, based upon a request by thatcompany for an extension of the maturity period, the Board of Directors of SRA passed a resolution and extended thematurity period as detailed below at an extraordinary meeting of the Board of Directors of SRA convened on April 28,
2015.
Corporate bonds with share acquisition rights: ¥2,500 million
Before change: April 30, 2015
After change: June 30, 2015

(Additional information)
SRA, a Company subsidiary, filed a damage lawsuit against Happinet Corporation (hereafter Happinet) on March 31,
2011. In response, Happinet filed a lawsuit against SRA in the Tokyo District Court on April 6, 2011. These cases are
currently being litigated. In accordance with the progress of the lawsuits, we will promptly provide information on
any matters requiring disclosure.

24

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2015

5. Other Information
1. Status of Production, Orders and Sales(1) Production amounts
Production by segment in the fiscal year ended March 31, 2015 is as follows.
Consolidated cumulative total for
Segment information by type of businessfiscal 2015 (from April 1, 2014 to % change YoY
March 31, 2015)

Systems Development (Millions of Yen)
System Operations and Infrastructure
Development (Millions of Yen)
Total (Millions of Yen)

19,301

103.8

3,911

109.4

23,212104.8

Notes:
1. Amounts are based on sales price.
2. The amounts above do not include consumption tax.
3. Intersegment transactions are offset.

(2) Purchase amounts
Purchases by segment in the fiscal year ended March 31, 2015 are as follows.
Consolidated cumulative total for
Segment information by type of businessfiscal 2015 (from April 1, 2014 to % change YoY
March 31, 2015)

Product Sales (Millions of Yen)

8,886

106.1

Total (Millions of Yen)

8,886

106.1

Notes:
1. Amounts are based on purchase price.
2. The amounts above do not include consumption tax.
3. Intersegment transactions are offset.

25

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Year Ended March 31, 2015(3) Status of orders
Status of orders by segment in the fiscal year ended March 31, 2015 is as follows.
OrdersSegment information by type of business

Order backlog

received(Millionsof% change YoY

of % change YoY

Yen)

Yen)
Systems Development(Millions

19,290

101.6

4,413

100.1

3,880

103.9

1,608

99.1

Product Sales

15,007

117.9

4,381

160.7

Total

38,179107.7

10,403

118.8

System Operations and Infrastructure
Development

Notes:
1. Amounts are based on sales price.
2. The amounts above do not include consumption tax.
3. Intersegment transactions are offset.

(4) Sales amounts
Sales by segment in the fiscal year ended March 31, 2015 are as follows.
Consolidated cumulative total for
Segment information by type of businessfiscal 2015 (from April 1, 2014 to % change YoY
March 31, 2015)

Systems Development (Millions of Yen)

19,288

105.0

3,894

108.9

Product Sales (Millions of Yen)

13,353

101.1

Total (Millions of Yen)

36,535104.0

System Operations and Infrastructure
Development (Millions of Yen)

Notes:
1. Amounts are based on sales price.
2. The amounts above do not include consumption tax.
3. Intersegment transactions are offset.

26